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U.S. Poised To Ease Biofuel Quotas

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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Refiners And Farmers Battle Over Biofuels

President Donald Trump has agreed to meet representatives of the U.S. oil refining industry and oil-supporting lawmakers to discuss the Renewable Fuel Standard Program—a meeting that could set the stage for negotiations over the U.S. biofuels policy that has been pitting the oil refining industry against the Midwest farm lobby.     

“The president was briefed, and has agreed on a meeting. Now it is just a matter of finding an hour window,” a source told Reuters last week, adding that he was told by the White House that the meeting would likely take place in the week of December 11.

Under the Renewable Fuel Standard (RFS), oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. The Midwest farm belt benefits from the policy, but the oil refiners do not—they lose petroleum-based market share of fuels and meeting the blending requirements costs them hundreds of millions of dollars.

While President Trump is a vocal supporter of the U.S. oil industry, he also supports the RFS, especially corn-based ethanol, which protects farming jobs in the Midwest.

Even if President Trump meets with the oil refiners, he is unlikely to move to overhaul the U.S. biofuel policy, because the powerful farm lobby will not support reforms.

Last week, the Environmental Protection Agency (EPA) issued the 2018 volume requirements for advanced fuels and biofuels. Relative to the levels finalized for 2017, the 2018 volume requirements for advanced biofuel and total renewable fuel are higher by 10 million gallons, the EPA said. A week before that, the EPA denied petitions for changing the so-called ‘point of obligation’ for the RFS away from refiners and importers and onto fuel blenders.

Related: The Man Behind The Oil Price Rally

“In the short term we believe that initiating a rulemaking process to reconsider or change the point of obligation would work counter to the program’s goals by causing significant upheaval and uncertainty in the fuels marketplace,” the EPA said in its motivation to deny the petitions.

The RFS policies have been pitting lawmakers from the corn belt against senators from the oil states in recent months.

On October 19, EPA Administrator Scott Pruitt sent a letter to several Midwestern Senators, assuring them of the administration’s commitment to the biofuels industry.

“Sen. Chuck Grassley of Iowa and other Midwestern senators received several assurances in a letter from Environmental Protection Agency Administrator Scott Pruitt, including that the agency will not follow through on a proposal that would have undermined the integrity of the Renewable Fuel Standard and represented an abandonment of President Donald Trump’s commitments to biofuels and a strong RFS,” Senator Grassley said.

On the other hand, Senators from oil refining states, including Texas and Oklahoma, sent a letter to President Trump in late October to ask for a meeting and discussions over a possible change in the biofuels policies. Related: What’s Holding Back Saudi Vision 2030?

“If your administration does not make adjustments or reforms on matters related to the Renewable Fuel Standard, it will result in a loss of jobs around the country, particularly in our states,” the letter—signed by Texas Senator Ted Cruz, Oklahoma Senator Jim Inhofe, Pennsylvania Senator Pat Toomey, and six others—said, as carried by Reuters.

The senators called for a meeting that would also include Midwest lawmakers, representatives of the biofuels industry, and relevant administration officials, so they all could “discuss a pathway forward toward a mutually agreeable solution.”

Senator Grassley of Iowa has said that a meeting would be a “waste of time”, and his spokesman told Reuters that no meeting had been scheduled.

Even if a meeting were to be held in the near future, it is unlikely to result in any moves that would amend U.S. biofuel standards and policies.

By Tsvetana Paraskova for Oilprice.com

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  • Bill Simpson on December 04 2017 said:
    Alcohol made from corn is the greatest waste of energy on this planet. Making it from sugar cane in tropical Brazil is O.K. I spend a bit more to buy pure gasoline. Alcohol absorbs too much water in a semi tropical climate, where I don't consume 4 tanks of gasoline a year.
    Small town retirement is nice, especially when Kim is getting his nuke tipped ICBM ready to fly. The probability of a mistake happening with Kim is a bit greater than with the Russians or Chinese. I suspect both Putin and Xi have some rigid rules and procedures in place to avoid an accidental, or unauthorized launch of an ICBM.
    Gasoline and diesel fuel are the greatest bargains in human history. If you doubt that, try and push your car for as far as a $2.50 gallon of gasoline can push it. That would be a good heart test. Try to avoid mountains.
    Trust me, people will miss oil and gas when they begin to run out. Should catastrophe be avoided, which I doubt will be the case, people will have Elon Musk to thank for getting the electric car revolution moving. He scared the big boys, and proved that electric cars could work, so that governments will force their use sooner than would have ordinarily been the case. If not for Tesla, they would have waited too late to get going. Now, they have no choice.
  • Tom on April 21 2018 said:
    Ethanol is a high octane fuel blending component. Blending ethanol in gasoline improvers combustion and reduces the need for carcinogenic octane boosters like Benzene, Toluene and Xylene. So ethanol does a lot of good things. Using ethanol reduces harmful emissions in vehicle exhaust.

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